"Although the 61% premium implied by Glencore's £5.50/share bid does not fully reflect the value of Caracal's acreage in Chad in our view, we believe it is likely to be welcomed by most investors in light of its recent share price underperformance."

As of last Friday, the stock had fallen 23% since the start of 2014.

Furthermore, Pozzi said that if shareholders don't vote through the takeover, the "unpopular merger with TransGlobe may be pursued again".

"Given the established relationship between Caracal and the mining group, we believe this acquisition has a limited direct read-across for other names in our coverage universe. However, we also believe it is a clear reminder that the industry could take advantage of distressed equity valuations present across the wider E&P sector."

The bank has slashed its target price for the stock from 690p to 550p, saying it does not expect an improved offer for the company.

"With an implied upside now well below the 40% average for the sector, we downgrade our rating to 'underweight' from 'overweight'," Pozzi said.

Caracal was also downgraded on Tuesday morning by Societe Generale to 'hold'.

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